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Court of AppealPartially AllowedCivil Application No. Nai. 396 of 2006 (as per notice of motion dated 20th December 2006)· [2007] KECA 401 (KLR)

Kenya Hotel Properties Limited v Willesden Investments Limited (Civil Application 322 of 2006) [2007] KECA 401 (KLR)

Court of Appeal of Kenya
9 March 2007
Philip Kiptoo TunoiP. K. TunoiPWP. N. WakiJOJ. W. Onyango Otieno
3,086 words in judgment
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The bottom line

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Kenya's Court of Appeal paused a Ksh.70.9 million judgment against Serena Hotels, but only after it provided a bank guarantee.

What this practically means

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Executive summary

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This is a single-award ruling of a three-judge bench of the Court of Appeal at Nairobi (Tunoi, Waki and Onyango Otieno JJA) on a notice of motion dated 20th December 2006 brought under rule 5(2)(b) of the Court of Appeal Rules. The applicant, a hotel operator, sought a stay of execution of a judgment of the High Court (Mutungi J, delivered 14th December 2006) awarding Willesden Investments Ltd approximately Ksh.70,902,400 in mesne profits, general damages for trespass and damages for loss of business opportunity, with interest. The Court restated the settled two-limb test: an applicant must show the intended appeal is arguable and that refusal of the stay would render a successful appeal nugatory. The Court found the intended appeal arguable on several grounds, including whether damages at Ksh.70 per hour per car were proved, whether the trial Judge improperly treated his own locus in quo observations as evidence, whether mesne profits could be awarded alongside loss of business opportunity damages, and when interest on mesne profits should run. On the nugatory limb, the Court held that the position of both parties must be weighed where the decretal amount is acceptably large, and that an applicant must place its financial position before the Court. Balancing the applicant's unchallenged assertions of serious business prejudice against the respondent's entitlement to the fruits of its judgment, the Court allowed the application conditionally, ordering a stay pending appeal upon the applicant providing a bank or insurance guarantee of Ksh.70,902,400 within thirty days, failing which the application would stand dismissed. Costs were awarded to the respondent.

Key legal issues

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01

The two-limb test for a stay pending appeal under rule 5(2)(b)

Holding

The applicant must show the appeal is arguable and that refusal of the stay would render a successful appeal nugatory; the Court found the intended appeal arguable on the quantum of damages, the basis of the mesne profits calculation, the Judge's reliance on his own locus in quo observations, and the start date for interest.

Reasoning

The Court restated the settled rule 5(2)(b) principles and identified several substantive matters — whether damages were proved at Ksh.70 per hour rather than per day, whether mesne profits could coexist with damages for loss of business opportunity, the Judge treating his locus in quo observations as evidence, and the interest start date — which it held needed full ventilation on appeal and were not frivolous.

p. 6
02

The nugatory principle as applied to a large money decree

Holding

Although a money decree ordinarily does not render an appeal nugatory if the respondent can repay, the Court may weigh the hardship to both sides where the decretal amount is acceptably large; the applicant's unchallenged assertions that payment would force disposal of key assets justified a conditional stay secured by a bank or insurance guarantee.

Reasoning

The Court weighed the applicant's business interests against the respondent's entitlement to the fruits of its judgment, noting the decretal sum exceeded Ksh.150,000,000 with interest and that the respondent had not countered the applicant's affidavit assertions of financial prejudice. A guarantee of Ksh.70,902,400 balanced both interests, securing the respondent while preserving the applicant's business pending appeal.

p. 7

Legal principles established

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  • An applicant under rule 5(2)(b) must demonstrate, first, that the appeal or intended appeal is arguable (not frivolous) and, secondly, that if the appeal were to succeed it would be rendered nugatory unless the stay or injunction is granted.
  • In considering whether the success of an intended appeal would be rendered nugatory by refusal of a stay of a money decree, the main requirement is to weigh the position of both parties in the interest of justice; hardship may justify a stay even of a money decree where the decretal amount is acceptably large, but the applicant must place its financial position before the court.
  • To obtain a stay of a large money decree on grounds of hardship, an applicant must do more than assert hardship; it must set out its financial position and how it would be affected by payment of the decretal amount.
  • Ordinarily the success of an appeal on a money decree is not rendered nugatory by refusal of a stay provided the respondent is not a 'man of straw' and can repay the decretal amount if the appeal succeeds.

Court orders

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  1. 1.Stay of execution of the judgment and decree of the superior court in High Court Civil Case No. 367 of 2000 dated 14th December 2006 pending the lodging, hearing and determination of the intended appeal
  2. 2.Stay conditional upon the applicant providing a bank guarantee or insurance guarantee for Ksh.70,902,400 within thirty (30) days of the date of the order, failing which the application stands dismissed
  3. 3.Unconditional stay for thirty (30) days from the date of the order to enable the applicant to comply
  4. 4.Costs of the application to the respondent

Authorities

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Legislation

  • Court of Appeal Rulesrule 5(2)(b)
  • Court of Appeal Rulesrule 74
  • Limitation of Actions Act Cap 22 Laws of Kenyasection 4(2)

Cases cited (4)

  • Reliance Bank Limited (in liquidation) vs. Norlake Investments Limited
    Civil Application No. Nai. 93 of 2002
  • Oraro & Rachier Advocates vs. Co-operative Bank of Kenya Ltd
    Civil Application No. Nai. 358 of 1999 (unreported)
  • Clarkson (Insurance Brokers) Limited vs. South Coast Fitness Centre
    Civil Application No. Nai. 204 of 1995 (unreported)
  • Trust Bank Limited & another vs. Investech Bank Limited and 3 others
    Civil Application Nos. Nai. 258 & 315 of 1999 (unreported)
On appeal from
High Court of Kenya at Nairobi
High Court Civil Suit No. 362 of 2000
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kenya Hotel Properties Limited v Willesden Investments Limited (Civil Application 322 of 2006) [2007] KECA 401 (KLR)", Case Analysis (2007). Civil Application No. Nai. 396 of 2006 (as per notice of motion dated 20th December 2006). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/401/eng@2007-03-09

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.